4 things to know about RAC audits

November 29, 2016

The skies may be sunny at your home health or hospice agency … and then you’re hit with an RAC audit.

The skies may be sunny at your home health or hospice agency … and then you’re hit with a RAC audit. Such a notice can cause you and your staff’s stress levels to spike as you scramble to figure out what went wrong and when. You may worry about financial penalties and that the hard-earned reputation of your agency might suffer.

The more you know about RAC audits – those administered by Recovery Audit Contractors – the better you can prevent them, and, in the worst-case scenario, deal with them. Learning about RAC audits is more urgent now than ever before, as home health and hospice agencies switch to a value-based payment model and the Centers for Medicare & Medicaid Services increases its scrutiny of home health agencies. In 2014 alone, RAC audits corrected $34.9 million in home health payments.

It’s time to get informed – here are four things you need to know about RAC audits:

1. They look for improper payments
The aim of the Medicare Fee for Service Recovery Audit Program is to identify and fix incorrect and improper payments in a variety of healthcare fields, home health and hospice included. RAC looks for both overpayments made to patients and underpayments made to providers.

While many RAC audits do uncover fraud, it is important to note that innocent mistakes or errors in documentation can also trigger an audit.

2. Private contractors will demand correction of the payment
Recovery audits fall under the umbrella of CMS, however, CMS contracts the auditing work to private companies. There are currently three firms that administer RAC audits, according to CMS’ website: Performant Recovery Inc., Cotiviti LLC and HMS Federal Solutions, and the company that comes calling depends on your agency’s geographic region. These auditors are required by law to employ nurses, certified coders, a physician contractor medical director and therapists to assist with the evaluation of claims.

If an improper payment is identified, the contractor alerts the home health agency that they are being subject to an audit and that they must send the overpayment amount, explained the law firm McGuireWoods. When conducting an audit, the RAC will look at agency data going back three years from the date the claim was paid, according to CMS.

RAC audits are no fun.

3. RAC audits can be appealed
However, RAC audits are not foolproof. If your agency feels that it is being audited without valid reason, or that you can defend a payment as being necessary, you can appeal the audit. There are varying levels of appeals depending on the case, and McGuireWoods lays out a helpful guide to them here. However, the important thing to note is that agencies must act fast when deciding to appeal – they have only 60 to 180 days to initiate an appeal, depending on its level.

4. The right EMR is the best defense against RAC audits
Saying that RAC audits are a big headache for home health agencies is an understatement. The best defense is to use industry-leading EMR software that is designed to keep your agency compliant. From real-time, automatic staff alerts for unauthorized actions to regulatory updates that are made well before the policy changes go in effect, the right EMR will empower your agency to avoid RAC audits and continue providing high quality care.

Thornberry’s Best-in-KLAS NDoc® software is the solution to your compliance needs. Contact Thornberry today to start a conversation about how your home health or agency can benefit from NDoc®.